The Leading Private Equity Firms Are Undervalued

 

Blackstone, KKR, Apollo and Carlyle are undervalued on the fact that their portfolio companies in their private equity businesses are undervalued.

It is an open secret that Wall Street equity research analysts model a 0 (zero) for the possible future appreciation value of the companies in Blackstone, KKR, Apollo and Carlyle and other leading private equity managers' portfolio.

Wall Street equity research analysts model out investment skill from Blackstone, KKR, Apollo and Carlyle, that is. Which, according to Wolfteam Ltd.'s projections and estimates is not well founded on past investment performance.

Carlyle Investment Into Insurance. Stable Long-Term Fees

Carlyle Group Inc., like the other leading alternative asset management firms has bought into insurance subsidiaries, according to Wolfteam Ltd.'s analysis.

From the excerpt from Carlyle's second quarter 2024 financial statement 81 billion USD from Carlyle's 435 billion USD total assets under management is invested in its insurance business, names global investment solutions:

 

Total Assets Under Management1 of $435 billion at June 30, 2024 increased 2% from the prior quarter as Q2
2024 inflows and appreciation were partially offset by realizations and outflows. Total Assets Under
Management was up 13% from one year ago
$435BN
Total AUM
See notes at end of document. Totals may not sum due to rounding.
n Carry Funds n Fortitude
n Credit & Other (non-carry funds)3
Total AUM by Segment
in billions
Total AUM by Product Type
in billions
Available
Capital2 $72 billion $83 billion
n GPE n GC n GIS
YoY
Change
13%
14%
25%
1%
 

This leads to 50 % + growth in revenue for the second quarter of 2024, compared to the second quarter of 2023:

 

REVENUES
Fund management fees $ 507.8 $ 534.4 $ 1,008.6 $ 1,058.0
Incentive fees 21.0 31.3 40.8 57.5
Investment income (loss), including performance allocations (254.0) 286.3 (81.5) 202.4
Revenue from consolidated entities 137.1 165.6 259.0 330.5
All other revenues 50.2 52.1 94.2 109.7
Total Revenues 462.1 1,069.7 1,321.1 1,758.1
EXPENSES
Cash-based compensation and benefits 270.6 206.3 530.8 428.2
Equity-based compensation 68.0 125.2 122.4 233.5
Performance allocations and incentive fee related compensation (92.2) 144.2 13.5 71.4
General, administrative and other expenses 168.5 187.9 327.7 335.6
Expenses from consolidated entities 102.1 152.1 195.8 276.7
Interest and other non-operating expenses 30.7 30.1 60.5 61.1
Total Expenses 547.7 845.8 1,250.7 1,406.5
Net investment income (loss) of consolidated funds 15.6 (5.1) 19.2 (12.1)
Income (loss) before provision for income taxes1 (70.0) 218.8 89.6 339.5
Provision (benefit) for income taxes (7.3) 69.5 27.0 91.4
Net income (loss) (62.7) 149.3 62.6 248.1
Net income attributable to non-controlling interests 35.7 1.1 60.3 34.3
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ (98.4) $ 148.2 $ 2.3 $ 213.8
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ (0.27) $ 0.41 $ 0.01 $ 0.59
Diluted $ (0.27) $ 0.40 $ 0.01 $ 0.58
Income (loss) before provision for taxes margin2 (15.1) % 20.5 % 6.8 % 19.3 %
Effective tax rate 10.4 % 31.8 % 30.1 % 26.9 %
Net performance revenues3 $ (154.6) $ 54.0 $ (99.5) $ (30.2)
 

Carlyle uses the insurance premiums from its insurance subsidiaries to invest in its main private equity and global credit business lines for the long-term. Insurance premiums provide long-term, stable capital which could be invested for more than 10 years to earn compound interest and increase several fold for example for 20 years via compounding. Akin to the Warren Buffett controlled Berkshire Hathaway.

KKR Investment Into Insurance

 

KKR Inc, the second biggest alternative asset manager globally has bought into an insurance companies. in order to use the insurance premiums proceeds to invest in its other main business lines private equity, real estate, private credit and lending, according to Wolfteam Ltd.'s analysis and estimates.

KKR Inc uses the stable, long-term nature of the insurance premiums, which are long-term since big insurance events are few and far between.

Thus KKR can do a maturity transformation and invest the long-term insurance premiums into mid-term in duration companies bought via insurance private equity, real estate, private credit and lending and insurance premiums.

This insurance premiums investing, maturity transformation strategy hinges on sound risk management and the lack of catastrophic events. Basically, investing the insurance premiums strategy was pioneered by Warren Buffett via the controlled by him Berkshire Hathaway conglomerate of businesses spanning energy, manufacturing, retail and insurance. Via Berkshire Hathaway Life, Berkshire Hathaway Reinsurance and Geico Berkshire Hathaway and other insurance business lines it has for decades mustered billions of USD of insurance premiums and invested them in the other Berkshire Hathaway business lines energy, manufacturing, retail and insurance and also in public stocks. Via astute and shrewd investment of insurance premiums Warren Buffett, the late Charlie Munger and his investment team have been able to beat the S&P 500 index by more than 15 % a year, building a gigantic amount of wealth as Berkshire Hathaway's market capitalization currently sits at 993 billion USD.

KRR, Blackstone, Carlyle and Apollo are trying to emulate Warren Buffett controlled Berksire Hathaway's success.

This whole insurance premiums maturity transformation strategy hinges on the avoidance of catastrophic risks. If we have many tornadoes, hurricanes, earthquakes and floods, many more than evident by historic statistics the insurance arms of Berkshire Hathaway, KRR, Blackstone, Carlyle and Apollo will have to pay out tens of billions if not hundred of billions of USDs of insurance and reinsurance damages in a short span of time, which will force them to fire sale private equity type owned companies and real estate and private loans thus crushing themselves and possibly the entire financial system.

After the 2008/2009 financial crisis and the following Great Recession regulators pushed out the risk in the financial system from the proprietary investing and trading of corporate and investment banks into private equity, real estate and lending parts of the financial system, also known as shadow banking.

As informed above, all this hinges on great risk management and Yes, on some luck not to have high frequency catastrophic events.

Below under perpetual capital are KKR's insurance premiums income:

Assets Under Management
• AUM of $601 billion, up 16% year-over-year, with $32 billion of organic new capital raised in the quarter and $108 billion in the
LTM
• Fee Paying AUM of $487 billion, up 16% year-over-year, with $29 billion of organic new capital raised in the quarter and $109
billion in the LTM
• Perpetual Capital of $250 billion, up 25% year-over-year driven primarily by the organic growth of Global Atlantic. Perpetual
capital represents 42% of AUM and 50% of FPAUM

Blackstone Investments Portfolio

 

Blackstone Inc, the global leader in alternative investments has diversified portfolio of investments. One peculiarity is that Blackstone has bought an insurance business and uses the long-term, stable insurance premiums to invest in its private equity, real estate, credit and multi-asset investing businesses, according to Wolfteam Ltd.'s analysis:

ASSETS UNDER MANAGEMENT

$1,076.4
2Q'23 2Q'24$67.1 $71.8
$202.8 $237.3
$173.7
$200.5
$287.6
$299.1
$731.1
$808.7
2Q'23 2Q'24$146.7 $174.4
$49.6
$64.4
$188.0
$179.6
$384.3
$418.6
2Q'23 2Q'24
ASSETS UNDER MANAGEMENT
Total AUM
($ in billions)
Fee-Earning AUM
($ in billions)
Perpetual Capital AUM
($ in billions)
Private Equity Real Estate Credit & Insurance Multi-Asset Investing

These long-term insurance premiums make up 418.6 billion USD in assets under management or 45 % of the fee-earning assets under management of Blackstone.

Blackstone made 10.3 billion USD in revenue and 3.6 billion USD in profit in the second quarter 2024. Such revenue and profit makes Blackstone undervalued even taking into account Blackstone's 186.92 billion USD in market capitalization, according to Wolfteam Ltd.'s projections and estimates.

Blackstone's private equity assets under management reached 330.6 billion USD in the second quarter of 2024 or growth of 8 %.

PRIVATE EQUITY
▪ Total AUM: Increased 8% to $330.6 billion with inflows of $12.1 billion in the quarter and $30.2 billion over the LTM.
– Inflows in the quarter included $2.9 billion in Infrastructure and $833 million for the ninth flagship private equity
fund.
– $1.6 billion of capital raised in BXPE, including amounts allocated to other segments.
▪ Capital Deployed: $11.3 billion in the quarter, including Adevinta, Civica, and Tropical Smoothie Cafe, and
$28.6 billion over the LTM.
– Committed an additional $9.2 billion in the quarter, including Hipgnosis, Copeland, and CoreWeave.
▪ Realizations: $7.8 billion in the quarter, including from Refinitiv, Mphasis, and Geo-Young, and $23.7 billion over the
LTM.
▪ Appreciation: Corporate Private Equity appreciated 2.0% in the quarter and 11.3% over the LTM.
– Tactical Opportunities appreciated 1.7% in the quarter and 6.3% over the LTM; Secondaries appreciated 2.0% in
the quarter and 3.1% over the LTM; Infrastructure appreciated 6.3% in the quarter and 21.6% over the LTM.% Change % Change
($ in thousands) 2Q'23 2Q'24 vs. 2Q'23 2Q'23 YTD 2Q'24 YTD vs. 2Q'23 YTD
Management and Advisory Fees, Net 515,689$ 514,851$ (0)% 1,005,461$ 1,016,058$ 1%
Fee Related Performance Revenues - 8,703 n/m - 8,703 n/m
Fee Related Compensation (162,379) (158,068) (3)% (330,105) (320,627) (3)%
Other Operating Expenses (77,423) (87,436) 13% (157,174) (177,471) 13%
Fee Related Earnings 275,887$ 278,050$ 1% 518,182$ 526,663$ 2%
Realized Performance Revenues 220,886 381,797 73% 721,893 831,671 15%
Realized Performance Compensation (90,162) (179,761) 99% (323,759) (400,242) 24%
Realized Principal Investment Income 11,708 5,725 (51)% 45,876 28,154 (39)%
Net Realizations 142,432 207,761 46% 444,010 459,583 4%
Segment Distributable Earnings 418,319$ 485,811$ 16% 962,192$ 986,246$ 2%
Segment Revenues 748,283$ 911,076$ 22% 1,773,230$ 1,884,586$ 6%
Total AUM 305,277,730$ 330,589,586$ 8% 305,277,730$ 330,589,586$ 8%
Fee-Earning AUM 173,736,641$ 200,486,740$ 15% 173,736,641$ 200,486,740$ 15%

Private equity remains the main business line of Blackstone and it is driven currently by the long-term insurance premiums.

Here are Blackstone's real estate and private equity funds' both realized and unrealized investments:

Blackstone | 19
INVESTMENT RECORDS AS OF JUNE 30, 2024(a)($/€ in thousands, except where noted) Committed Available Unrealized Investments Realized Investments Total Investments Net IRRs (d)
Fund (Investment Period Beginning Date / Ending Date) Capital Capital (b) Value MOIC (c) Value MOIC (c) Value MOIC (c) Realized Total
Real Estate
Pre-BREP 140,714$ -$ -$ n/a 345,190$ 2.5x 345,190$ 2.5x 33% 33%
BREP I (Sep 1994 / Oct 1996) 380,708 - - n/a 1,327,708 2.8x 1,327,708 2.8x 40% 40%
BREP II (Oct 1996 / Mar 1999) 1,198,339 - - n/a 2,531,614 2.1x 2,531,614 2.1x 19% 19%
BREP III (Apr 1999 / Apr 2003) 1,522,708 - - n/a 3,330,406 2.4x 3,330,406 2.4x 21% 21%
BREP IV (Apr 2003 / Dec 2005) 2,198,694 - 3,825 n/a 4,666,129 1.7x 4,669,954 1.7x 12% 12%
BREP V (Dec 2005 / Feb 2007) 5,539,418 - 6,226 n/a 13,463,448 2.3x 13,469,674 2.3x 11% 11%
BREP VI (Feb 2007 / Aug 2011) 11,060,122 - 7,392 n/a 27,758,817 2.5x 27,766,209 2.5x 13% 13%
BREP VII (Aug 2011 / Apr 2015) 13,505,655 1,017,292 2,078,698 0.6x 28,429,380 2.3x 30,508,078 1.9x 20% 14%
BREP VIII (Apr 2015 / Jun 2019) 16,607,865 2,009,039 12,355,770 1.5x 22,291,311 2.3x 34,647,081 1.9x 24% 14%
BREP IX (Jun 2019 / Aug 2022) 21,346,428 3,385,159 24,730,496 1.4x 8,688,793 2.2x 33,419,289 1.5x 58% 14%
*BREP X (Aug 2022 / Feb 2028) 30,639,330 22,661,720 8,511,549 1.1x - n/a 8,511,549 1.1x n/a n/m
Total Global BREP 104,139,981$ 29,073,210$ 47,693,956$ 1.3x 112,832,796$ 2.3x 160,526,752$ 1.9x 17% 15%
BREP Int'l (Jan 2001 / Sep 2005) 824,172€ -€ -€ n/a 1,373,170€ 2.1x 1,373,170€ 2.1x 23% 23%
BREP Int'l II (Sep 2005 / Jun 2008) (e) 1,629,748 - - n/a 2,583,032 1.8x 2,583,032 1.8x 8% 8%
BREP Europe III (Jun 2008 / Sep 2013) 3,205,420 396,691 156,196 0.3x 5,856,192 2.4x 6,012,388 2.0x 18% 13%
BREP Europe IV (Sep 2013 / Dec 2016) 6,676,577 1,104,861 1,073,412 0.8x 10,133,370 1.9x 11,206,782 1.7x 18% 12%
BREP Europe V (Dec 2016 / Oct 2019) 7,992,703 904,320 4,630,379 0.8x 6,758,899 3.8x 11,389,278 1.6x 41% 8%
BREP Europe VI (Oct 2019 / Sep 2023) 9,923,250 3,326,999 8,095,867 1.2x 3,439,595 2.6x 11,535,462 1.4x 72% 13%
*BREP Europe VII (Sep 2023 / Mar 2029) 7,681,989 6,508,115 1,332,487 1.1x - n/a 1,332,487 1.1x n/a n/m
Total BREP Europe 37,933,859€ 12,240,986€ 15,288,341€ 1.0x 30,144,258€ 2.3x 45,432,599€ 1.6x 17% 11%
BREP Asia I (Jun 2013 / Dec 2017) 4,262,075$ 898,228$ 1,672,278$ 1.7x 7,032,407$ 1.9x 8,704,685$ 1.9x 16% 12%
BREP Asia II (Dec 2017 / Mar 2022) 7,354,811 1,310,706 6,641,542 1.2x 1,801,330 1.9x 8,442,872 1.3x 30% 5%
*BREP Asia III (Mar 2022 / Sep 2027) 8,210,352 6,834,894 1,294,586 1.0x - n/a 1,294,586 1.0x n/a (17)%
Total BREP Asia 19,827,238$ 9,043,828$ 9,608,406$ 1.2x 8,833,737$ 1.9x 18,442,143$ 1.5x 17% 8%
BREP Co-Investment (f) 7,396,015 100,106 959,827 2.0x 15,227,390 2.2x 16,187,217 2.2x 16% 16%
Total BREP 175,761,986$ 51,455,343$ 75,415,550$ 1.2x 173,745,405$ 2.3x 249,160,955$ 1.8x 17% 14%
*BREDS High-Yield (Various) (g) 25,008,694 8,738,933 5,522,621 1.0x 20,244,034 1.4x 25,766,655 1.3x 10% 9%
Private Equity
Corporate Private Equity
BCP I (Oct 1987 / Oct 1993) 859,081$ -$ -$ n/a 1,741,738$ 2.6x 1,741,738$ 2.6x 19% 19%
BCP II (Oct 1993 / Aug 1997) 1,361,100 - - n/a 3,268,627 2.5x 3,268,627 2.5x 32% 32%
BCP III (Aug 1997 / Nov 2002) 3,967,422 - - n/a 9,228,707 2.3x 9,228,707 2.3x 14% 14%
BCOM (Jun 2000 / Jun 2006) 2,137,330 24,575 200 n/a 2,995,106 1.4x 2,995,306 1.4x 6% 6%
BCP IV (Nov 2002 / Dec 2005) 6,773,182 195,824 382 n/a 21,720,334 2.9x 21,720,716 2.9x 36% 36%
BCP V (Dec 2005 / Jan 2011) 21,009,112 1,035,259 66,016 n/a 38,806,330 1.9x 38,872,346 1.9x 8% 8%
BCP VI (Jan 2011 / May 2016) 15,195,243 1,341,026 4,196,056 2.0x 28,611,427 2.2x 32,807,483 2.2x 14% 12%
BCP VII (May 2016 / Feb 2020) 18,858,738 1,695,536 17,800,433 1.6x 18,003,374 2.5x 35,803,807 2.0x 25% 13%
BCP VIII (Feb 2020 / Apr 2024) 25,919,222 8,631,985 23,282,787 1.3x 2,295,428 2.4x 25,578,215 1.4x n/m 10%
*BCP IX (Apr 2024 / Apr 2029) 20,063,265 20,063,265 - n/a - n/a - n/a n/a n/a
Energy I (Aug 2011 / Feb 2015) 2,441,558 174,492 496,646 1.5x 4,189,846 2.0x 4,686,492 2.0x 14% 11%
Energy II (Feb 2015 / Feb 2020) 4,918,278 864,914 3,974,634 1.8x 4,290,605 1.8x 8,265,239 1.8x 11% 8%
Energy III (Feb 2020 / Jun 2024) 4,373,418 1,563,746 5,220,402 1.9x 1,348,610 2.4x 6,569,012 2.0x 55% 30%
*Energy Transition IV (Jun 2024 / Jun 2029) 3,623,326 3,593,259 - n/a - n/a - n/a n/a n/a
BCP Asia I (Dec 2017 / Sep 2021) 2,437,080 417,510 2,708,957 1.9x 2,611,544 3.5x 5,320,501 2.4x 51% 26%
*BCP Asia II (Sep 2021 / Sep 2027) 6,778,892 4,712,552 2,550,881 1.7x 91,510 2.2x 2,642,391 1.7x n/m 26%
Core Private Equity I (Jan 2017 / Mar 2021) (h) 4,760,284 1,171,242 7,339,096 1.9x 2,836,291 5.1x 10,175,387 2.3x 58% 17%
*Core Private Equity II (Mar 2021 / Mar 2026) (h) 8,450,958 5,871,750 3,697,866 1.5x 126,586 n/a 3,824,452 1.6x n/a 15%
Total Corporate Private Equity 153,927,489$ 51,356,935$ 71,334,356$ 1.6x 142,166,063$ 2.2x 213,500,419$ 2.0x 16% 15%

Blackstone remains undervalued on private equity. The long-term insurance premiums insure a stable back wind for private equity, real estate and credit.

Apollo Investments

 

Apollo Global Management, the alternative asset manager has taken the rout of investing, buying insurance companies and investing the long-term, so called 'perpetual' capital from insurance premiums it receives from its insurance business into its private equity, credit and lending business lines, according to Wolfteam Ltd.'s research

The insurance premiums insure a stable, durable, long-term investment source that can be plowed into other initiatives of Apollo in order to wait for long-term great investment results. This model was pioneered by Warren Buffet and the controlled by him Berkshire Hathaway conglomerate which also owns insurance businesses like General Re, Berkshire Hathaway Life, Geico etc. and invests the insurance premiums it receives from them into its other Berkshire Hathaway's owned businesses like energy or manufacturing and even invests them in public, common stocks.

The durable, long-term nature of insurance premiums bring long-term stability to invest for the long-term in other businesses of Berkshire Hathaway, Apollo Global Management and other alternative asset management firms like KKR, Carlyle and the global alternative assets leader Blackstone, which also invests the insurance premiums into its real estate business line, in addition.

The long-term investments, insurance premiums provide help Warren Buffett's Berkshire Hathaway and Blackstone, Apollo, KKR, Carlyle and other alternative asset management groups achieve better, higher risk adjusted returns from investing and thus unlock their firms' value further.

Warren Buffett's Berkshire Hathaway and Blackstone, Apollo, KKR, Carlyle are all undervalued. Still, in Wolfteam Ltd.'s estimates.

Apollo Global Management Second Quarter 2024 Earnings Analysis

 

Apollo Global Management, the global private equity and alternative assets manager reported very good results in the second quarter of 2024.

Apollo, like Blackstone, KKR and Carlyle has taken the strategic route of buying into an insurance firm, Athene in Apollo's case and using the long-term in nature, so called perpetual capital of insurance premiums to invest in its private equity, credit and lending, retirement services and principal investments segments.

Apollo has a lot of unrealized value judging by the 6 billion USD in non-GAAP netted revenue and net income of 828 million USD for 2Q 2024 compared with Apollo Global Management 1.3 billion USD in market capitalization, according to Wolfteam Ltd.'s projections and estimates.

 

(In millions, except per share amounts) 2Q'23 1Q'24 2Q'24 YTD'23 YTD'24
Revenues
Asset Management
Management fees $452 $438 $462 $866 $900
Advisory and transaction fees, net 170 169 267 325 436
Investment income (loss) 138 402 278 590 680
Incentive fees 26 26 47 41 73
Retirement Services
Premiums 9,041 101 673 9,137 774
Product charges 207 238 251 405 489
Net investment income 2,948 3,576 3,804 5,560 7,380
Investment related gains (losses) 366 1,677 (134) 1,431 1,543
Revenues of consolidated variable interest entities 347 411 366 628 777
Other revenues 7 2 4 20 6
Total Revenues 13,702 7,040 6,018 19,003 13,058
Expenses
Asset Management
Compensation and benefits (516) (667) (604) (1,186) (1,271)
Interest expense (31) (51) (53) (62) (104)
General, administrative and other (226) (240) (319) (423) (559)
Retirement Services
Interest sensitive contract benefits (2,012) (2,884) (1,824) (3,301) (4,708)
Future policy and other policy benefits (9,512) (543) (1,095) (9,978) (1,638)
Market risk benefits remeasurement gains (losses) 71 154 16 (275) 170
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (153) (207) (227) (291) (434)
Policy and other operating expenses (452) (453) (478) (889) (931)
Total Expenses (12,831) (4,891) (4,584) (16,405) (9,475)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities 20 39 (21) 18 18
Net gains (losses) from investment activities of consolidated variable interest entities 12 25 1 46 26
Other income (loss), net 48 (26) 24 80 (2)
Total Other Income (Loss) 80 38 4 144 42
Income (loss) before income tax (provision) benefit 951 2,187 1,438 2,742 3,625
Income tax (provision) benefit (201) (422) (261) (454) (683)
Net income (loss) 750 1,765 1,177 2,288 2,942
Net (income) loss attributable to non-controlling interests (151) (338) (324) (679) (662)
Net income (loss) attributable to Apollo Global Management, Inc. 599 1,427 853 1,609 2,280
Preferred stock dividends — (24) (25) — (49)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $599 $1,403 $828 $1,609 $2,231
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $1.00 $2.31 $1.36 $2.67 $3.67
Net income (loss) attributable to Common Stockholders - Diluted $1.00 $2.28 $1.35 $2.67 $3.64
Weighted average shares outstanding – Basic 579 588 587 582 588
Weighted average shares outstanding – Diluted 579 605 590 582 605 

The stable, long-term insurance fees comprise circa 60 % of Apollo's assets under management:

Asset Management: Assets Under Management
Note: AUM totals may not add due to rounding. 1. Perpetual Capital AUM derived from Athene includes assets, unfunded commitments, and available capital attributable to ADIP. 2. Other primarily includes MidCap Financial ($13 billion), Apollo
Commercial Real Estate Finance, Inc. ($9 billion), Apollo Debt Solutions BDC ($11 billion), Apollo Diversified Real Estate Fund/Apollo Diversified Credit Fund ($7 billion), MidCap Financial Investment Corporation ($3 billion), Apollo Senior Floating
Rate Fund/Apollo Tactical Income Fund ($1 billion), and other AUM related to a publicly traded business development company ($2 billion), among others. Other also includes third-party capital within Apollo Aligned Alternatives ($6 billion), with
the remainder of its net asset value attributable to Athene ($11 billion). AUM related to Apollo Debt Solutions, MidCap Financial Investment Corporation and the publicly traded business development company is as of March 31, 2024.
21
• Total AUM increased $79 billion, or 13%, year-over-year primarily driven by $72 billion of inflows from Asset Management and $72 billion of gross inflows
from Retirement Services, as well as mark-to-market appreciation, partially offset by $61 billion of outflows primarily driven by normal course activity at
Athene and $29 billion of realization activity
• Fee-Generating AUM increased $60 billion, or 13%, year-over-year primarily driven by robust net organic growth at Athene, fundraising across a variety of
Asset Management strategies, mark-to-market appreciation, and strong levels of capital deployment
• Nearly 60% of Apollo’s total AUM is comprised of perpetual capital, which is highly scalable and does not rely on cyclical drawdown fundraising dynamic.

With 60 % of assets in long-term insurance premiums, Apollo can unlock tremendous further value by investing its insurance premium capital for the long-term in stable, net free cash flow and net profit generating leading, global businesses.

Apollo Global Management Investments

 

Apollo Global Management, the global leader in alternative asset management has taken the route pioneered by Warren Buffett and then followed by all the major private equity and alternative asset management groups int the world of owning an insurance business and using the proceeds for long-term investing in its private equity, real estate and private credit lines, according to Wolfteam Ltd.'s analysis.

Nearly 60% of Apollo’s total AUM is comprised of perpetual capital, which is highly scalable and does not rely on cyclical drawdown fundraising dynamics according to Apollo's second quarter 2024 earnings statement.

Asset Management: Assets Under Management
Note: AUM totals may not add due to rounding. 1. Perpetual Capital AUM derived from Athene includes assets, unfunded commitments, and available capital attributable to ADIP. 2. Other primarily includes MidCap Financial ($13 billion), Apollo
Commercial Real Estate Finance, Inc. ($9 billion), Apollo Debt Solutions BDC ($11 billion), Apollo Diversified Real Estate Fund/Apollo Diversified Credit Fund ($7 billion), MidCap Financial Investment Corporation ($3 billion), Apollo Senior Floating
Rate Fund/Apollo Tactical Income Fund ($1 billion), and other AUM related to a publicly traded business development company ($2 billion), among others. Other also includes third-party capital within Apollo Aligned Alternatives ($6 billion), with
the remainder of its net asset value attributable to Athene ($11 billion). AUM related to Apollo Debt Solutions, MidCap Financial Investment Corporation and the publicly traded business development company is as of March 31, 2024.
21
• Total AUM increased $79 billion, or 13%, year-over-year primarily driven by $72 billion of inflows from Asset Management and $72 billion of gross inflows
from Retirement Services, as well as mark-to-market appreciation, partially offset by $61 billion of outflows primarily driven by normal course activity at
Athene and $29 billion of realization activity
• Fee-Generating AUM increased $60 billion, or 13%, year-over-year primarily driven by robust net organic growth at Athene, fundraising across a variety of
Asset Management strategies, mark-to-market appreciation, and strong levels of capital deployment
• Nearly 60% of Apollo’s total AUM is comprised of perpetual capital, which is highly scalable and does not rely on cyclical drawdown fundraising dynamics 

Apollo, thus can invest the long-term insurance fee premiums proceeds for the long-term and wait for long-term capital appreciation. 

This is reflected in Apollo's second quarter 2024 robust earnings:

Revenues
Asset Management
Management fees $452 $438 $462 $866 $900
Advisory and transaction fees, net 170 169 267 325 436
Investment income (loss) 138 402 278 590 680
Incentive fees 26 26 47 41 73
Retirement Services
Premiums 9,041 101 673 9,137 774
Product charges 207 238 251 405 489
Net investment income 2,948 3,576 3,804 5,560 7,380
Investment related gains (losses) 366 1,677 (134) 1,431 1,543
Revenues of consolidated variable interest entities 347 411 366 628 777
Other revenues 7 2 4 20 6
Total Revenues 13,702 7,040 6,018 19,003 13,058
Expenses
Asset Management
Compensation and benefits (516) (667) (604) (1,186) (1,271)
Interest expense (31) (51) (53) (62) (104)
General, administrative and other (226) (240) (319) (423) (559)
Retirement Services
Interest sensitive contract benefits (2,012) (2,884) (1,824) (3,301) (4,708)
Future policy and other policy benefits (9,512) (543) (1,095) (9,978) (1,638)
Market risk benefits remeasurement gains (losses) 71 154 16 (275) 170
Amortization of deferred acquisition costs, deferred sales inducements and value of business acquired (153) (207) (227) (291) (434)
Policy and other operating expenses (452) (453) (478) (889) (931)
Total Expenses (12,831) (4,891) (4,584) (16,405) (9,475)
Other Income (Loss) – Asset Management
Net gains (losses) from investment activities 20 39 (21) 18 18
Net gains (losses) from investment activities of consolidated variable interest entities 12 25 1 46 26
Other income (loss), net 48 (26) 24 80 (2)
Total Other Income (Loss) 80 38 4 144 42
Income (loss) before income tax (provision) benefit 951 2,187 1,438 2,742 3,625
Income tax (provision) benefit (201) (422) (261) (454) (683)
Net income (loss) 750 1,765 1,177 2,288 2,942
Net (income) loss attributable to non-controlling interests (151) (338) (324) (679) (662)
Net income (loss) attributable to Apollo Global Management, Inc. 599 1,427 853 1,609 2,280
Preferred stock dividends — (24) (25) — (49)
Net income (loss) attributable to Apollo Global Management, Inc. Common Stockholders $599 $1,403 $828 $1,609 $2,231
Earnings (Loss) per share
Net income (loss) attributable to Common Stockholders - Basic $1.00 $2.31 $1.36 $2.67 $3.67
Net income (loss) attributable to Common Stockholders - Diluted $1.00 $2.28 $1.35 $2.67 $3.64
Weighted average shares outstanding – Basic 579 588 587 582 588
Weighted average shares outstanding – Diluted 579 605 590 582 605

Apollo is undervalued according to Wolfteam Ltd.

Carlyle Investments

  

Carlyle Group Inc, the private equity and alternative asset manager  global leader with 425 billion USD assets under management has taken the route of the other leading private equity and alternative asset management firms of owning an insurance business and using the proceeds to reinvest the stable, long-term almost perpetual in maturity insurance premiums into private equity, real estate, private credit and lending, according to Wolfteam Ltd.'s analysis.

The perpetual fee earning assets under management or insurance fees are invested 73 billion USD in assets in real estate, 4 billion USD in direct lending and others.

Basically, Carlyle Group is doing a carry trade in maturity from the almost perpetual insurance fees into real estate and direct lending.

Carlyle Group Inc reported 1.76 billion USD in revenues and 213.8 million USD in net profit in the second quarter of 2024.

5
• Fund management fees increased 5% in 2Q’24 from the comparable period in 2023 primarily driven by the impact of fundraising across our platform, particularly in our Global Investment Solutions products, as well as an increase in fees
earned under the Fortitude strategic advisory services agreement, partially offset by the impact of step-downs in certain products in our Global Private Equity segment. In funds on which management fees are based on invested capital, the
impact of capital deployment was largely offset by the impact of realizations.
• Investment income, including performance allocations, in 2Q’24 primarily reflects the accrual of unrealized performance allocations driven by appreciation in our carry fund portfolio, while Investment loss, including performance allocations,
in 2Q’23 reflects an investment loss of $104 million related to the dilution of our ownership in Fortitude as well as the reversal of unrealized performance allocations in certain carry funds.
• Equity-based compensation increased in 2Q’24 from the comparable period in 2023, driven by awards granted in February 2024, including awards to certain senior Carlyle professionals that are subject to vesting based on the achievement of
stock price performance conditions over a service period of three years.
• Performance allocations and incentive fee related compensation in 2024 reflects the realignment of our employee compensation program, which became effective December 31, 2023 and increased the proportion of our accrued performance
allocations used to compensate our employees. As a result of the realignment, we expect our cash-based compensation and benefits to decrease and performance allocations and incentive fee related compensation to increase in 2024.
(Dollars in millions, except per share amounts) 2Q'23 2Q'24 YTD 2Q'23 YTD 2Q'24
REVENUES
Fund management fees $ 507.8 $ 534.4 $ 1,008.6 $ 1,058.0
Incentive fees 21.0 31.3 40.8 57.5
Investment income (loss), including performance allocations (254.0) 286.3 (81.5) 202.4
Revenue from consolidated entities 137.1 165.6 259.0 330.5
All other revenues 50.2 52.1 94.2 109.7
Total Revenues 462.1 1,069.7 1,321.1 1,758.1
EXPENSES
Cash-based compensation and benefits 270.6 206.3 530.8 428.2
Equity-based compensation 68.0 125.2 122.4 233.5
Performance allocations and incentive fee related compensation (92.2) 144.2 13.5 71.4
General, administrative and other expenses 168.5 187.9 327.7 335.6
Expenses from consolidated entities 102.1 152.1 195.8 276.7
Interest and other non-operating expenses 30.7 30.1 60.5 61.1
Total Expenses 547.7 845.8 1,250.7 1,406.5
Net investment income (loss) of consolidated funds 15.6 (5.1) 19.2 (12.1)
Income (loss) before provision for income taxes1 (70.0) 218.8 89.6 339.5
Provision (benefit) for income taxes (7.3) 69.5 27.0 91.4
Net income (loss) (62.7) 149.3 62.6 248.1
Net income attributable to non-controlling interests 35.7 1.1 60.3 34.3
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ (98.4) $ 148.2 $ 2.3 $ 213.8
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ (0.27) $ 0.41 $ 0.01 $ 0.59
Diluted $ (0.27) $ 0.40 $ 0.01 $ 0.58
Income (loss) before provision for taxes margin2 (15.1) % 20.5 % 6.8 % 19.3 %
Effective tax rate 10.4 % 31.8 % 30.1 % 26.9 %
Net performance revenues3 $ (154.6) $ 54.0 $ (99.5) $ (30.2)
Carlyle Second Quarter 2024 U.S. GAAP Results
Net income attributable to The Carlyle Group Inc. common stockholders was $148 million for Q2 2024, or $0.40 per
share on a diluted basis

Carlyle Group Inc Is Undervalued. Carlyle Investments

 

Carlyle Group Inc, the private equity and alternative asset management firms is undervalued according to Wolfteam Ltd.'s projections and estimates.

Carlyle's intrinsic value is 32 billion USD, compared to Carlyle's market capitalization of 15.52 billion USD.

Carlyle also invested in an insurance firm for its own account and has in that way 90 billion USD of so called perpetual capital fee-earning assets or 29 % of the total. These assets are actually insurance premiums, which are long-term in nature and could be invested strategically by Carlyle. With other words, Carlyle invests for the long-term the insurance premiums of its insurance subsidiary in its private equity, global credit and global investment solutions other business lines.

Here is an excerpt from Carlyle's second quarter 2024 earnings statement:

(Dollars in millions, except per share amounts) 2Q'23 2Q'24 YTD 2Q'23 YTD 2Q'24
REVENUES
Fund management fees $ 507.8 $ 534.4 $ 1,008.6 $ 1,058.0
Incentive fees 21.0 31.3 40.8 57.5
Investment income (loss), including performance allocations (254.0) 286.3 (81.5) 202.4
Revenue from consolidated entities 137.1 165.6 259.0 330.5
All other revenues 50.2 52.1 94.2 109.7
Total Revenues 462.1 1,069.7 1,321.1 1,758.1
EXPENSES
Cash-based compensation and benefits 270.6 206.3 530.8 428.2
Equity-based compensation 68.0 125.2 122.4 233.5
Performance allocations and incentive fee related compensation (92.2) 144.2 13.5 71.4
General, administrative and other expenses 168.5 187.9 327.7 335.6
Expenses from consolidated entities 102.1 152.1 195.8 276.7
Interest and other non-operating expenses 30.7 30.1 60.5 61.1
Total Expenses 547.7 845.8 1,250.7 1,406.5
Net investment income (loss) of consolidated funds 15.6 (5.1) 19.2 (12.1)
Income (loss) before provision for income taxes1 (70.0) 218.8 89.6 339.5
Provision (benefit) for income taxes (7.3) 69.5 27.0 91.4
Net income (loss) (62.7) 149.3 62.6 248.1
Net income attributable to non-controlling interests 35.7 1.1 60.3 34.3
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ (98.4) $ 148.2 $ 2.3 $ 213.8
Net income (loss) attributable to The Carlyle Group Inc. per common share:
Basic $ (0.27) $ 0.41 $ 0.01 $ 0.59
Diluted $ (0.27) $ 0.40 $ 0.01 $ 0.58
Income (loss) before provision for taxes margin2 (15.1) % 20.5 % 6.8 % 19.3 %
Effective tax rate 10.4 % 31.8 % 30.1 % 26.9 %
Net performance revenues3 $ (154.6) $ 54.0 $ (99.5) $ (30.2)

And the distribution of assets under management:

Assets Under
Management
• Total Assets Under Management: $435 billion, up 13% year-over-year
• Fee-earning Assets Under Management: $307 billion, up 13% year-over-year
• Perpetual Capital Fee-earning AUM: $90 billion, representing 29% of total Fee-earning AUM
• Pending Fee-earning AUM: $18 billion, up 19% year-over-year
• Available Capital for investment: $83 billion, up 15% year-over-year

Blackstone Second Quarter 2024 Earnings Analysis

 

Blackstone Inc. the leading global alternative asset manager reported net profit of 2.0 billion USD on 10.3 billion USD in revenues in the second quarter 2024.

Blackstone, Inc, along with other leading alternative asset managers like KKR & Co, Apollo and Carlyle has a large insurance subsidiary, held for its own account basically. Blackstone uses the long-term proceeds from insurance premiums from its insurance business to invest in the private equity, real estate and private credit and lending and multi-asset investing business lines of Blackstone, according to Wolfteam Ltd.'s analysis estimates. The advantage of the insurance premiums income is that it is long-term, stable in nature. Thus Blackstone is independent of the short-term fluctuations of the equity market. Private equity, due to its equity component is notoriously dependent on stock market price swings. With the insurance premiums however and their long-term nature Blackstone avoids private equity being a beta product on the Standard and Poor's 500 and other equity capital markets businesses.

$ in thousands, except per share data) (unaudited) 2Q'23 2Q'24 2Q'23 YTD 2Q'24 YTD 2Q'23 LTM 2Q'24 LTM
Revenues
Management and Advisory Fees, Net 1,709,370$ 1,787,313$ 3,367,685$ 3,514,461$ 6,633,877$ 6,818,036$
Incentive Fees 153,077 188,299 295,953 367,640 616,993 766,858
Performance Allocations 616,479 653,870 504,161 1,752,330 405,208 1,780,342
Principal Investments 218,924 42,269 (164,435) 582,489 (1,001,693) 447,593
Interest and Dividend Revenue 148,505 104,999 238,990 202,838 394,042 480,345
Other (31,664) 19,631 (45,818) 64,451 (89,718) 17,340
Total Revenues 2,814,691$ 2,796,381$ 4,196,536$ 6,484,209$ 6,958,709$ 10,310,514$
Expenses
Compensation and Benefits 1,060,595 1,206,202 1,823,706 2,514,506 3,088,003 4,003,770
General, Administrative and Other 275,034 311,928 548,428 681,878 1,111,137 1,250,755
Interest Expense 108,096 108,616 212,537 216,819 393,373 436,150
Fund Expenses 31,585 5,960 79,984 9,910 104,032 48,913
Total Expenses 1,475,310$ 1,632,706$ 2,664,655$ 3,423,113$ 4,696,545$ 5,739,588$
Other Income (Loss) 87,595$ 44,934$ 153,451$ 27,167$ 123,294$ (210,281)$
Income Before Provision for Taxes 1,426,976$ 1,208,609$ 1,685,332$ 3,088,263$ 2,385,458$ 4,360,645$
Provision for Taxes 223,269 260,246 270,944 543,917 224,029 786,434
Net Income 1,203,707$ 948,363$ 1,414,388$ 2,544,346$ 2,161,429$ 3,574,211$
Redeemable NCI in Consolidated Entities 17,688 258 10,988 (39,411) (162,829) (295,917)
Non-Redeemable NCI in Consolidated Entities 584,745 503,691 716,314 1,291,957 1,077,022 1,874,534
Net Income Attributable to Blackstone Inc. (''BX'') 601,274$ 444,414$ 687,086$ 1,291,800$ 1,247,236$ 1,995,594$
Net Income Per Share of Common Stock, Basic 0.79$ 0.58$ 0.91$ 1.69$ 1.67$ 2.62$
Net Income Per Share of Common Stock, Diluted 0.79$ 0.58$ 0.91$ 1.69$ 1.67$ 2.62

What is more the stable insurance premiums investment pool of Blackstone constitutes 41 % of all the investment funds gathered by Blackstone:

Total AUM increased to $1,076.4 billion, up 7% year-over-year, with $39.4 billion of inflows in the quarter
and $151.5 billion over the LTM.
▪ Fee-Earning AUM of $808.7 billion was up 11% year-over-year, with $53.0 billion of inflows in the quarter
and $151.5 billion over the LTM.
▪ Perpetual Capital AUM reached $418.6 billion, up 9% year-over-year.
– Fee-Earning Perpetual Capital AUM increased to $361.9 billion, representing 45% of Fee-Earning AUM.

While total 'dry powder', capital available for investments is 18 % of the total:

Invested Performance Eligible AUM reached $531.3 billion at quarter end.
▪ Undrawn capital (“Total Dry Powder”) available for investment of $181.0 billion.

The revenue of Blackstone for the second quarter of 2024 compared with the second quarter of 20223 increased by more 47 % or  the increase was with nominal 3.3 billion USD due to higher performance fees  and principal investments revenues.